Jasleen Kaur

January 2015

You should read Poor Economics (by Abhijit Banerjee and Esther Duflo, both are Professors of Economics at MIT) if you want to get a firsthand experience of how the poor live their lives. The book gives a beautiful perspective on all aspects of the how poverty prevails, what is the vicious cycle attached to poverty and how (and why) the decisions of the poor are different from those of non-poor. Banerjee and Duflo have touched upon every factor that affects the poor and vice-versa, affected by poverty. With the help of real life examples and experiences, the book converts theory and models into stories that can be read by both economists and non- economists.

The book brings out the relation between nutrition and poverty and how changes in income bring about changes in choice of food. What affects the decisions of the poor when it comes to health care? Is it rationality or faith? Are the poor rational given the little information that they have and the amount of modern technologies they have? Are their decisions the right ones when it comes to prevention and cure? What is the role of education in the lives of poor? Do they look at it in the same way as the rich do when faced with various kinds of constraints that the rich do not face? Is there a quality- quantity trade-off when deciding as to the number of children to bear? What is the concept of ‘missing women’ as proposed by Amartya Sen? What are the risks that the poor face in their day to day lives? Are they optimally insured? Can micro-credit solve the problems of risks and uncertainties that they face? What role does institutions; politics and the political environment of where the poor live affect their lives and decisions? And finally, the core and one of the most important questions- Can the poor come out of poverty or is poverty a phenomenon that is irreversible?

I read the book to analyze these questions and to find answers to them. We have answers and answers not in the form of plain theoretical answers but in terms of empirical examples from developing countries/poor areas and what are the dynamics behind how the poor make their decisions. Using tools of impact evaluation, the authors take various programs into purview like the “Balsakhi “program carried out by an India based NGO-Pratham and its impact of education on the poor. It shows impacts of the One-child policy in China, the family planning program( distribution of contraceptives) in Columbia, the micro-credit program in Bangladesh, the distribution of free and subsidized mosquito nets in Africa etc. We also come across very interesting and new terms like the ‘low hanging fruit’, ‘sugar daddies’, ’Bengali Doctors’ etc. which are specific to certain regions of the world but answers to general problems of the poor.

The book has a vast scope to be interpreted in the way the reader wants to as it goes both from specificity to general ideas and vice-versa. So, read more to find out what is going on in the world where we live. The book to me is more of a collection of stories (real life examples) that enables the reader to enjoy, learn, critically analyze and innovate at the same time. The book is a must read for all who are interested in Development economics as it gives a new perspective on things that we might have been pondering for long. And for those, who are not related to the field should read to know what is going on around us and economics is not only about models and theories but of experiences and instances that define an individual and his role in the society.

Enjoy the book!!!

P.S: For people who are more interested in the subject are suggested to take the online course, “The challenges of Global Poverty”, by edx.